Fiat SpA may primarily trade its shares in the New York Stock Exchange following a planned merger with Chrysler Group, sources told Bloomberg News. Fiat chief executive Sergio Marchionne is assessing whether to make the switch from the Milan exchange, since the carmaker's revenue and profit center would shift to the United States following the merger.
One of the sources said that Fiat may keep Milan as a secondary listing. If such move pushes through, it could be considered as highly political and symbolic for debt-ridden Italy, which is struggling from a series of economic recessions.
Marchionne, who is also chief executive of Chrysler, plans to combine the two carmakers with an aim to create global manufacturing group that has the capacity to challenge General Motors Co. and Volkswagen. Fiat is seeking to acquire the rest of the stake in Chrysler it currently does not own. Fiat presently holds a 58.5-percent stake in Chrysler.
Chrysler has been vital in Fiat’s bid to keep earning money as it accounts for most of the Italian carmaker’s results. Fiat has been able to offset its string of losses in Europe (over EUR700 million or $908 million), thanks to Chrysler. North America accounted for around 75 percent of Fiat’s operating profit in 2012. Erich Hauser, an analyst for Credit Suisse, said that it “makes a lot of sense“ for Marchionne to list Fiat-Chrysler in the US as refinancing costs are typically lower and are not so much subject to the funding costs of sovereign bonds.
He added that carmakers tend to get higher multiples. Giuseppe Berta, a Fiat historian and business professor at Milan's Bocconi University, told Bloomberg News, Italy and Turin should understand that the old Fiat doesn't exist anymore. He noted that Fiat now has the US as its biggest market and he would be surprised if Marchionne doesn't choose the New York Stock Exchange.